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2023 Supreme(Online)(Bom) 196
HIGH COURT OF BOMBAY
BHARATI DANGRE, J
Quess Corp – Appellant
Versus
Netcore Cloud Pvt.Ltd – Respondent
ARBITRATION PETITION (L) NO. 24705 OF 2022
For the Appellants/Petitioners: Mr.Vishal Nautiyal, Ms.Vidhi N. Sharda, Mr.Smit Shah, Mr.Aviral Dhirendra
For the Respondents: Mr.Mayur Khandeparkar, Prakhar Tandon, Irfan Khan, Ms.Sudha Dwivedi
The independence and impartiality of an arbitrator are crucial; mere representation of opposing counsel does not inherently disqualify an arbitrator from serving, confirming the requirement for substantive evidence of disqualifying interests.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 12(5), 13, and 14 - Petitioner sought termination of arbitrator's mandate based on alleged ineligibility - The arbitrator’s obligation to disclose conflicts was highlighted, stressing independence and impartiality of arbitrators - Main issues included the validity of the arbitrator's appointment and the requisite disclosure of conflicts - Court found no evidence of disqualification affecting arbitrator’s ability to proceed, dismissing the petition. (Paras 1, 6, 7, 14, 19)
(B) Due Process of Law - Impartiality is critical in arbitration; relevant standards for potential disqualification were referenced - Previous rulings underscore the independence required for arbitral functions and limitations on challenges based on perceived conflicts. (Paras 10, 17)
Facts of the case:
The petitioner entered into a Master Service Agreement with the respondent for SMS services, leading to arbitration over disputed invoices, which the petitioner now contests based on arbitrator’s alleged conflicts of interest.
Findings of Court:
The court concluded no substantive disqualifying relationships or interests existed that would affect the arbitrator’s neutrality.
Issues: Discussions focused on the adequacy of disclosures by the arbitrator and implications on his eligibility based on established legal standards for arbitrator independence.
Ratio Decidendi: The court maintained that perceived conflicts requiring disclosure must be substantial enough to substantively affect impartiality; in this case, no such conflicts were substantiated.
Result: Petition dismissed.
JUDGMENT:-
1 By the present petition, the petitioner seek relief of terminating the mandate of sole Arbitrator, Shri Amrut Joshi appointed as a Arbitrator to adjudicate the disputes that had arisen between the parties out of the ‘Masters Service Agreement’ dated 24/5/2017.
The petitioner, a limited Company incorporated under the Companies Act, claim to be a leading business service provider, whereas the respondent is involved in the business of providing mobility and e-mail services to distinct cliental in India.
Since it was desirous of availing transmission Bulk SMS services from the respondent, the petitioner entered into a Master Service Agreement on 24/5/2017, under which the respondent was to provide application based platform to host and disseminate bulk SMS to end users of the petitioner.
2 As per the petitioner, the parties started performing their respective obligations under the agreement. However, certain disputes arose with respect to multiple invoices raised by the respondent, and this resulted in the respondent invoking arbitration clause and proposed the name of Mr.Amrut Joshi as Sole Arbitrator in the notice dated 16/1/2020.
The petitioner did not agree to the appointment of the named arbitrator, and this resulted in the respondent approaching this Court under sub-section (6) of Section 11 of the Arbitration and Conciliation Act. By order dated 23/11/2022, Mr.Amrut Joshi was appointed as Sole Arbitrator to decide the disputes and differences, subject to the terms and conditions stipulated in the order.
3 The proceedings commenced before the learned Arbitrator after a date was fixed for preliminary hearing, and he made disclosure in the form mentioned in Vth Schedule of the Arbitration and Conciliation Act, 1996 , inter alia, stating that he had no direct or indirect, past or present interest in relation to the subject matter in dispute, whether financial, business, professional or other kind which would give rise to justifiable doubt as to the independence or impartiality.
Issues came to be framed by the learned Arbitrator and the matter was fixed for the claimant’s evidence on 4/7/2022.
4 The petitioner contend, that while the proceedings were ongoing before the Arbitral Tribunal, it came to its notice that the Arbitrator was representing the counsel for the respondent (Mr.Prabhakar Tandon and Ms.Sudha Dwivedi) in an interlocutory application No.443 of 2021 filed in Company Petition (IB) No.1399/NB/2017, captioned as Bank of India vs. Mandhana Industries Ltd.
5 The aforesaid information took the petitioner by surprise, and according to him, this was not disclosed by the Arbitrator, during the preliminary hearing held by him or any time thereafter. On gathering further information, it was revealed that the Arbitrator has been representing counsel for the respondent in several other matters before various forums, including the High Court of Mumbai and the NCLAT and certain orders to that effect are placed on record by the petitioner.
6 It is in this background I have heard the counsel for the petitioner, who would vehemently argue that the sole arbitrator, in the wake of the aforesaid, has become ineligible to continue as an arbitrator, as per Section 12 (5) r/w Schedule VII of the Act. The submission is, he is de jure and de facto unable to perform his functions, and since the issue of ineligibility goes to the root of the appointment, he would lack inherent jurisdiction to proceed further, which would enable a party to file an application u/s.14(2) to the Court to decide on termination of his/her mandate.
The submission is, the appointment of Mr.Amrut Joshi as sole Arbitrator is against the ethos and spirit of the Act and the continuation of the proceedings by him is bad- in-law and therefore, this Court shall terminate his mandate and stay the ongoing arbitration proceedings.
Per contra, the learned counsel Mr.Khandeparkar assertively deny the said argument and he would raise a question about the maintainability of the
